In his latest column for the New York Times, award-winning economist and best-selling author Paul Krugman makes the case that President Obama should focus on inequality in his upcoming State of the Union address, for reasons both policy-based as well as political.
When it comes to policy, Krugman pushes back against those who would say that inequality is less important than full employment and economic growth. "[J]obs and inequality are closely linked if not identical issues," he writes. He cites research showing inequality contributed to the financial crash of 2008, and also argues that "high unemployment — by destroying workers’ bargaining power — has become a major source of rising inequality and stagnating incomes."
On the politics of the matter, Krugman puts forward the idea that inequality is easier for voters to understand than macroeconomic policy. "[T]he most important reason for Mr. Obama to focus on inequality is political realism," Krugman writes. "Like it or not, the simple fact is that Americans 'get' inequality; macroeconomics, not so much." To bolster this argument, Krugman cites public polling that shows Americans of all political stripes are concerned about inequality — including 45 percent of Republicans.
By contrast, it’s very hard to communicate even the most basic truths of macroeconomics, like the need to run deficits to support employment in bad times. You can argue that Mr. Obama should have tried harder to get these ideas across; many economists cringed when he began echoing Republican rhetoric about the need for the federal government to tighten its belt along with America’s families. But, even if he had tried, it’s doubtful that he would have succeeded....
The point is that of the two great problems facing the U.S. economy, inequality is the one on which Mr. Obama is most likely to connect with voters. And he should seek that connection with a clear conscience: There’s no shame in acknowledging political reality, as long as you’re trying to do the right thing.
So I hope we’ll hear something about jobs Tuesday night, and some pushback against deficit hysteria. But if we mainly hear about inequality and social justice, that’s O.K.